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TMI Blog2015 (1) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... on sales by invoking the provisions of section 195 read with section 40(a)(i) of the Income tax Act, 1961, holding that no withholding of tax in terms of provisions of section 195 of the Act was required in this case as the discount allowed did not form any payment to the non-resident, without appreciating the AO's finding of fact that the payment to non-resident was not under any contractual obligation as no stipulation regarding payment of discount to the non-resident was made in the contract-note entered into by the assessee with the non-resident company. 2. That Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 59,36,606/- made by the AO being disallowance out of discount allowed on sales by invoking the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer should be restored. 4. As against this, Learned A.R. of the assessee supported the order of CIT(A). He also submitted that in the present case, there is neither payment of interest nor commission and therefore, no TDS was deductible. He placed reliance on the following judicial pronouncements: (i) Addl. CIT vs. Pearl Bottling (P) Ltd. [2011] 46 SOT 133 (Vizag.) (ii) G.E. India Technology Centre (P) Ltd. vs. CIT [2010] 327 ITR 456 (SC) (iii) Foster's India (P) Ltd. vs. Income Tax Officer [2008] 117 TTJ (Pune) 346 (iv) CIT vs. Singapore Airlines Ltd. [2009] 319 ITR 29 (Del.) (v) Income Tax Officer vs. Mother Dairy Food Processing Ltd. [2011] 7 ITR (Trib) 16 (Delhi) (vi) NMDC Ltd. vs. ACIT (TDS) [2011] 7 ITR (Trib) 690 (Vizag.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd paper book, it has been specified that the seller shall cause the issuance of a banker's guarantee or SBLC by Punjab National Bank, Kanpur (seller's bank) for an amount equal to the provisional price plus interest in the form acceptable to buyer that will be informed in separate message. It was also specified that within two business days from the date buyer's bank receives the guarantee in format acceptable to buyer's bank, buyer shall pay to seller the prepayment amount. The provisional price as per this contract has been fixed at (JPY)24,200 lac. Hence, it is seen that there is no mention in the agreement i.e. the purchase contract that any prepayment discount will be allowed by the assessee. The payment was to be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. In that case, the goods were supplied by the assessee to a distributor on fixed price which was lesser then the MRP and the Assessing Officer was of the view that on the difference of such agreed price and the MRP, TDS was deductible u/s 194H and this stand of the Assessing Officer was not approved by the Tribunal. But in the present case, the facts are different. In the present case, lesser price has been realized by the assessee from the buyers against the agreed price between the assessee and the buyer and this lesser realization from the buyer is on account of advance payment received from the buyer and even in the absence of any such clause in the purchase contract, the assessee has given the nomenclature discount to this b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also received in India against providing of bank guarantee from Punjab National Bank, Mall Road Branch, Kanpur, India and the adjustments of the benefit allowed to the buyer has been adjusted in the invoices issued in India on the overseas buyer and under these facts, in our considered opinion, income in the hands of the buyer in the form of discount or interest (whatever name we give to it) is taxable in India and therefore, this judgment of Hon'ble Apex Court is also not rendering any help to the assessee. 6.5 The third judgment cited by Learned A.R. of the assessee is the Tribunal decision rendered in the case of Foster's India (P) Ltd. (supra). This judgment is in respect of TDS u/s 194H i.e. in respect of payment of commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a decision of Tribunal in the case of NMDC Ltd. (supra). In this case also, the dispute was regarding deductibility of TDS u/s 194H and not u/s 195 of the Act and therefore, this decision of the Tribunal is also not applicable in the facts of the present case. 6.9 The last judgment cited by Learned A.R. of the assessee is a decision of Tribunal in the case of Ankur Udyog Ltd. (supra). In this case, the dispute was regarding deductibility of TDS against quantity discount provided by the assessee to its buyers. The case of the Assessing Officer was that the TDS was deductible u/s 194H of the Act. We find that in this case also, the dispute was not u/s 195 of the Act and move over, even discount was not in respect of pre payment received b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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